Hugoton Royalty Trust (HGTXU) ends February payout and warns on going concern, excess costs

Rhea-AI Filing Summary

Hugoton Royalty Trust reported that there will be no cash distribution to unitholders for February 2026 because all three of its net profits interests remain in excess cost positions. The Trust’s cash reserve was reduced by $63,000 to cover expenses, and any future net profits would first be used to replenish this reserve before resuming distributions.

The Trust highlighted serious liquidity pressures and stated that these conditions raise substantial doubt about its ability to continue as a going concern, as it lacks sufficient cash to meet obligations over the year after its year-end financial statements are issued. Excess costs remain significant, including $3,034,000 for Kansas, $13,458,000 for Oklahoma, and $11,466,000 for Wyoming, each including accrued interest. The Trustee is exploring options such as a potential asset sale or termination of the Trust, but prior outreach to third parties produced no interest and any sale may not yield funds for unitholders after obligations are paid.

Positive

• None.

Negative

• No February 2026 distribution and continued suspension of payouts since July 2023 underscore that the Trust’s net profits interests remain in substantial excess cost positions, leaving unitholders without current income.
• Explicit going concern warning and severe liquidity strain as the Trust states it does not have sufficient cash to meet obligations over the year after its year-end financial statements are issued, with large cumulative excess costs in all three conveyances.

Insights

Income trust and energy royalty analyst

No February payout, deep excess costs, and going concern doubts make this a materially negative update.

Hugoton Royalty Trust will not pay a February 2026 cash distribution because all three net profits interests remain in excess cost positions. The cash reserve fell by $63,000, and future net profits would first rebuild this reserve before any unitholder payments resume.

Liquidity stress is severe: management explicitly states these conditions raise substantial doubt about the Trust’s ability to continue as a going concern, as it lacks sufficient cash to meet obligations over the next year after its year-end financial statements are issued. Cumulative excess costs remain large at $3,034,000 for Kansas, $13,458,000 for Oklahoma, and $11,466,000 for Wyoming, each including accrued interest.

The Trustee has deferred its own fee since April 2024, sought but not found viable financing, and is evaluating alternatives such as terminating the Trust or selling its net profits interests. It has already contacted potential buyers without success and cautions that even if a sale occurred, there is no assurance of any residual funds for unitholders after obligations are satisfied.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 17, 2026

HUGOTON ROYALTY TRUST

(Exact name of registrant as specified in its charter)

Texas			001-10476	58-6379215
(State or other jurisdiction of incorporation)			(Commission File Number)	(IRS Employer Identification No.)
Argent Trust Company Trustee 3838 Oak Lawn Ave, Suite 1720
Dallas, Texas				75219-4518
(Address of principal executive offices)				(Zip Code)

Registrant’s telephone number, including area code: (855) 588-7839

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Units of Beneficial Interest		HGTXU		OTCQB

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On February 17, 2026, the Registrant issued a news release that it will not declare a monthly cash distribution for the month of February 2026 and also discussed the liquidity of the Registrant. A copy of the news release is furnished as Exhibit 99.1.

The information in this Current Report, including the news release attached hereto, is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities of that Section.

Item 9.01 Financial Statements and Exhibits.

(d)	Exhibits.
	Exhibit 99.1		News Release dated February 17, 2026

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		HUGOTON ROYALTY TRUST
		By:	ARGENT TRUST COMPANY, TRUSTEE
Date:	February 17, 2026	By:	/s/ NANCY WILLIS
			Nancy Willis
			Director of Royalty Trust Services

Hugoton Royalty Trust

HUGOTON ROYALTY TRUST DECLARES NO FEBRUARY CASH DISTRIBUTION; ADDRESSES TRUST LIQUIDITY CONCERNS

Dallas, Texas, February 17, 2026 – Argent Trust Company, as Trustee of the Hugoton Royalty Trust (the “Trust”) (OTCQB: HGTXU) announced today there would not be a cash distribution to the holders of its units of beneficial interest for February 2026 due to the excess cost positions on all three of the Trust’s conveyances of net profits interests. The Trust’s cash reserve was reduced by $63,000 for the payment of Trust expenses. To the extent net profits income is received in future months, the Trustee anticipates replenishing the cash reserve prior to declaring any future distributions to unitholders. Replenishment of the cash reserve may include any increase in the cash reserve total, as determined by the Trustee. Based on the current excess costs, the Trustee does not foresee any distributions in the near term.

Trust Liquidity

As previously disclosed, accumulated excess costs for the Kansas, Oklahoma, and Wyoming conveyances have resulted in insufficient net proceeds to the Trust which have resulted in no unitholder distributions since July 2023, and a reduction in the Trust’s expense reserve. These conditions raise substantial doubt about the Trust’s ability to continue as a going concern as the Trust does not have sufficient cash to meet its obligations during the one-year period after the dates that the year-end financial statements are issued. Factors attributable to the cash shortage are primarily lower oil and natural gas prices, development costs, the two advance distributions totaling $1,000,000, and the previously disclosed excess cost positions on the Kansas, Oklahoma, and Wyoming Conveyances.

The Trustee has curtailed spending as much as possible by deferring or eliminating unnecessary expenses, including the Trustee fee, which has been deferred since April 2024. This does not mitigate the fact that there are dwindling funds, and the Trust may have to take drastic measures to continue to exist. The Trustee has sought sources of financing but currently believes that financing in an amount sufficient to satisfy the Trust’s long-term liquidity needs is unlikely to be a viable option for the Trust moving forward. As a result, the Trustee has reviewed and intends to continue to review options for the Trust, which may include alternatives to continuing as a going concern, such as seeking to terminate the Trust or marketing the Trust’s interest (which are net profits interests burdened by excess costs) for a potential sale. The Trustee has reached out to potential third parties regarding interest in the Trust’s assets, but no interest resulted from such discussions. As a result, the Trustee believes that a potential sale of the Trust’s assets may be unlikely in the near term, however it will continue to consider any and all viable options. Even if a sale of the Trust assets was to occur, there is no assurance that the proceeds would result in funds to distribute to unitholders after all financial obligations of the Trust are met. Any material sale of assets and/or termination of the Trust requires unitholder approval by at least 80 percent of all outstanding units.

Hugoton Royalty Trust

The following table shows underlying gas and oil sales and average prices attributable to the net overriding royalty for both the current month and prior month. Underlying gas and oil sales volumes attributable to the current month were primarily produced in November.

		Underlying Sales
		Volumes (a)								Average Price
		Gas (Mcf)				Oil (Bbls)				Gas (Mcf)				Oil (Bbls)
Current Month Dist			692,000				14,000			$	3.71			$	54.10
Prior Month Dist			739,000				19,000			$	3.33			$	60.11
(a) Sales volumes are recorded in the month the Trust receives the related net profits income. Because of this, sales volumes may fluctuate from month to month based on the timing of cash receipts.

Mach Natural Resources (“Mach”) has advised the Trustee that there was a credit in the amount of $70,000 for development costs, production expense of $1,400,000 and overhead of $912,000 in determining the royalty calculation for the Trust for the current month.

Development Costs

Mach has recently advised the Trustee that the underlying development costs include a well that Mach completed in July 2025 in Major County, Oklahoma, but for which the division order was not finalized until December 2025, determining the allocation of development costs. Mach has also advised the Trustee that it does not currently have any budgeted plans to drill additional wells in any of the conveyances in 2026, but did not preclude the possibility of additional wells drilled or non-operated development that may occur in any of the conveyances in 2026.

Excess Costs

Mach has advised the Trustee that excess costs increased by $109,000 on properties underlying the Kansas net profits interests. Underlying cumulative excess costs remaining on the Kansas net profits interests total $3,034,000 including accrued interest of $300,000.

Hugoton Royalty Trust

Mach has advised the Trustee that $136,000 in excess costs was recovered on properties underlying the Oklahoma net profits interests. Underlying cumulative excess costs remaining on the Oklahoma net profits interests total $13,458,000, including accrued interest of $918,000.

Mach has advised the Trustee that $12,000 in excess costs was recovered on properties underlying the Wyoming net profits interests. Underlying cumulative excess costs remaining on the Wyoming net profits interests total $11,466,000, including accrued interest of $1,202,000.

Cumulative excess costs balances above do not include advance distributions made to the Trust by XTO Energy totaling $1,000,000 (net to the Trust), that can be treated as a production cost, except that the advances can be recouped, together with interest, from what would otherwise be distributable net profits under any of the three conveyances; provided, however that Mach shall only be entitled to withhold distributions of net proceeds as recoupment to the extent that such recoupment does not leave the Trust with less than $250,000 of available cash.

For more information on the Trust, including the annual tax information, distribution amounts, and historical press releases, please visit our website at www.hgt-hugoton.com.

Statements made in this press release regarding future events or conditions are forward looking statements. Actual future results, including development costs and timing, and future net profits, recoupment of excess costs, ability to make future filings with the Securities and Exchange Commission and admission to the OTCQB could differ materially due to changes in natural gas and oil prices and other economic conditions affecting the gas and oil industry and other factors described in Part I, Item 1A of the Trust's Annual Report on Form 10-K for the year ended December 31, 2024.

* * *

Contact: Nancy Willis Director of Royalty Trust Services Argent Trust Company, Trustee 855-588-7839

FAQ

Why is Hugoton Royalty Trust (HGTXU) not paying a February 2026 distribution?

Hugoton Royalty Trust is not paying a February 2026 cash distribution because all three of its net profits interests remain in excess cost positions. Available cash was further reduced by $63,000 for expenses, and future net profits must first replenish the cash reserve before distributions resume.

What liquidity concerns did Hugoton Royalty Trust (HGTXU) disclose in this update?

The Trust disclosed serious liquidity issues, stating conditions raise substantial doubt about its ability to continue as a going concern. It does not have sufficient cash to meet obligations for the year after its year-end financial statements are issued, reflecting low proceeds, excess costs, and prior advance distributions.

How large are the excess costs affecting Hugoton Royalty Trust’s Kansas, Oklahoma, and Wyoming interests?

Cumulative excess costs remain high: Kansas net profits interests carry $3,034,000 including $300,000 interest, Oklahoma carries $13,458,000 including $918,000 interest, and Wyoming carries $11,466,000 including $1,202,000 interest. These balances prevent net profits from reaching unitholders.

What strategic options is Hugoton Royalty Trust (HGTXU) considering due to its financial stress?

The Trustee is reviewing options that may include terminating the Trust or marketing its net profits interests for a potential sale. It has contacted potential third parties without success and cautions that even a sale might not yield distributable funds after all financial obligations are paid.

How has Hugoton Royalty Trust tried to manage expenses amid its cash shortage?

The Trustee has curtailed spending by deferring or eliminating unnecessary expenses, including deferring the Trustee fee since April 2024. Despite these measures, it notes funds are dwindling and warns the Trust may have to take drastic measures to continue to exist.

How long have Hugoton Royalty Trust (HGTXU) unitholders gone without distributions?

The Trust states that accumulated excess costs in Kansas, Oklahoma, and Wyoming have produced insufficient net proceeds, resulting in no unitholder distributions since July 2023. During this period, the Trust’s expense reserve has also been reduced, worsening its overall liquidity position.

Filing Exhibits & Attachments

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Press Releases

• EX-99.1 EX-99.1 62.1 KB